OVERBAKER & OVERBAKER

FEDERAL CIRCUIT COURT OF AUSTRALIA

OVERBAKER & OVERBAKER

[2019] FCCA 2863

Catchwords:
FAMILY LAW – PROPERTY – the Wife’s application for a division of the parties’ interests in property – whether moneys loaned by each party’s parents should be characterised as loans and/or gifts and whether these should be included in the pool or characterised as contributions – where there has been ongoing non-disclosure by the Husband in relation to a business operated on one of the parties’ properties – whether there should be an adjustment in the Husband’s favour because his parents sold the property upon which the business operated for $175,000 less than its sworn value – whether there should be an adjustment in the Wife’s favour in relation to section 75(2) factors – where the Husband is desperate to retain the property upon which the business is operated.

HELD – determinations made in relation to whether various disputed loans are to be included in the pool of assets for division – determination that there should be a 5% adjustment in the Husband’s favour for contributions – 15% adjustment made in the Wife’s favour in relation to section 75(2) factors – orders made allowing the Husband an opportunity to retain the property from which the business operates.

Legislation:

Family Law Act 1975 (Cth): ss.75(2), 79.

Cases cited:

Stanford v Stanford [2012] HCA 52
Hickey and Hickey and Attorney General for the Commonwealth of Australia [2003] FamCA 395

Bevan and Bevan [2013] FamCAFC 116

Applicant:

MS OVERBAKER

Respondent:

MR OVERBAKER

File Number:

MLC 9564 of 2018

Judgment of:

Judge Bender

Hearing date:

28 August 2019

Date of Last Submission:

28 August 2019

Delivered at:

Melbourne

Delivered on:

10 October 2019

REPRESENTATION

Counsel for the Applicant:

Mr Arnold

Solicitors for the Applicant:

J A Middlemis

Counsel for the Respondent:

Self-represented

Solicitors for the Respondent:

Not applicable

ORDERS

By 4:00pm on 11 November 2019 the Husband provide to the Wife in writing, evidence from the proposed lender/s of his capacity to refinance the mortgage on Property A and/or otherwise borrow sufficient funds such that he is able to make a payment to the Wife in the sum of $467,062.98.
In the event the Husband complies with order (1) herein, the Husband shall pay to the Wife the sum of $467,062.98 by 4:00pm on 11 December 2019 (“the payment”).
Contemporaneously with the payment:
(a)the Wife shall do all such acts and things and sign all documents necessary to transfer to the Husband at the expense of the Husband all of her right, title and interest in Property A;
(b)the Husband indemnify the Wife against all payments and liabilities pursuant to any mortgage, all rates, taxes and outgoings of or with respect to Property A of whatsoever nature and kind;
(c)the Husband refinance the mortgage on Property A so as to discharge the Wife’s liability therein; and
(d)the Husband indemnify the Wife in relation to:
(i)the debt of $82,600 to Ms A Overbaker;
(ii)the debt of $22,500 to Mr B;
(iii)the debt of $11,700 to Mr C.
In the event the Husband fails to comply with order (1) herein or order (2) herein, Property A shall be forthwith listed for sale and sold (“the Property A sale”) and the following conditions shall apply:
(a)the Wife shall be at liberty to choose the identity of and appoint:
(i)the selling agent; and
(ii)the conveyancer;
(b)the selling price and conditions shall be as determined by the Wife in consultation with the selling agent;
(c)the Wife shall keep the Husband advised at all times of:
(i)the proposed selling price and conditions;
(ii)all offers received; and
(iii)an intention to accept an offer;
(d)the Property A sale proceeds be applied as follows:
(i)firstly, to the payment of all costs, commission and expenses of the Property A sale;
(ii)secondly, to discharge the mortgage;
(iii)thirdly, the payments of:
A.        $82,600 to Ms A Overbaker;
B.        $22,500 to Mr B; and
C.        $17,000 to Mr C;
(iv)fourthly, the payment of any capital gains tax arising from the Property A sale;
(v)fifthly, an amount that enables a payment to the Wife such that she receives 60% of the total net realisable assets of the parties to the Wife; and
(vi)sixthly, the balance to the Husband.
For the purposes of calculating the payments to the parties pursuant to orders (4)(d)(v) and(4)(d)(vi) herein, the total net realisable assets of the parties consists of:
(a)the former matrimonial home which the Wife is to retain with an agreed value of $455,000, less the mortgage of $211,086 and less the debt to the Wife’s parents of $171,356.45 for which the Wife will be responsible;
(b)the proceeds of sale of Property A being the sale price less the payment of sale costs and commissions, discharge of the mortgage, the payment of the debts listed in order (4)(d)(iii) herein and the payment of any capital gains tax;
(c)the Husband’s boat with a value of $7,500 and the Husband’s motorbike with a value of $2,500 which the Husband is to retain;
(d)the proceeds of sale of stock of $33,704 retained by the Husband; and
(e)the plant and equipment on Property A with a value of $13,921 which the Husband is to retain.
Pending the payment or completion of the Property A sale:
(a)the Husband have the sole right to occupy Property A and during such right of occupation the Husband pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of Property A as they fall due;
(b)the parties hold their respective interests in Property A upon trust pursuant to these orders; and
(c)neither party shall encumber or further encumber Property A without the consent in writing of the other party.
In the event Property A is to be sold pursuant to order (4) herein, the Husband sign all documents and do all things necessary to facilitate the Property A sale and in the event the Husband does not sign such documents within seven days of a request to do so:
(a)the Wife shall have leave to apply to a Registrar of this Court requesting that pursuant to section 106A of the Family Law Act 1975 (Cth) a Registrar of the Court sign all documents necessary to effect the Property A sale; and
(b)in order to comply with the requirements of PEXA the Wife shall nominate a solicitor practising in Town D authorised to sign documents for PEXA transfers and such solicitor sign on behalf of the Husband upon written request from the Wife’s solicitor to do so upon provision of a sealed copy of these orders.
Liberty be reserved to either party to apply with respect to the terms and conditions of and execution of the Property A sale.
Within 30 days of the date of the payment to the Wife pursuant to order (2) herein or the settlement of the Property A sale (“the date”):
(a)the Husband shall do all such acts and things and sign all documents necessary to transfer to the Wife at the expense of the Wife all of his right, title and interest in the property at Property E (“the former matrimonial home”);
(b)the Wife indemnify the Husband against all payments and liabilities pursuant to any mortgage, all rates, taxes and outgoings of or with respect to the former matrimonial home of whatsoever nature and kind;
(c)the Wife refinance the mortgage on the former matrimonial home so as to discharge the Husband’s liability therein; and
(d)the Wife indemnify the Husband with respect to the loan owed by the parties to Mr F and Ms G in the sum of $171,356.45.
In the event the mortgage on the former matrimonial home is not refinanced by the date, then the Husband sign all documents and do all things necessary to transfer to the Wife the former matrimonial home to be held on trust for sale and the former matrimonial home be forthwith sold altogether out of Court (“the sale”) and the proceeds of the sale be applied:
(a)firstly, to the payment of all costs, commission and expenses of the sale;
(b)secondly, to discharge the mortgage;
(c)thirdly to repay the loan to Mr F and Ms G; and
(d)the balance to the Wife.
Pending the transfer of the former matrimonial home or completion of the sale:
(a)the Wife have the sole right to occupy the former matrimonial home and during such right of occupation the Wife pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings on the former matrimonial home as they fall due;
(b)the parties hold their respective interest in the former matrimonial home upon trust pursuant to these orders;
(c)neither party encumber or further encumber the former matrimonial home without the consent in writing of the other party.
The Husband retain to the exclusion of the Wife all of his right, title and interest in:
(a)all farm plant and equipment, if any, in the Husband’s possession;
(b)all livestock (including but not limited to cattle, sheep and horses), if any, in the Husband’s possession;
(c)his boat;
(d)his motorbike; and
(e)the Husband’s bank accounts.
The Husband shall indemnify the Wife against all liabilities relating to the business (including but not limited to):
(a)creditors;
(b)income tax liabilities;
(c)goods and services tax; and
(d)capital gains tax liabilities.
The partnership between the Husband and the Wife trading as “Company H” (“the partnership”) is declared to be dissolved as at 30 June 2018 and with respect to the partnership:
(a)the Husband shall retain (save as otherwise set out in these orders) to the exclusion of the Wife all of the chattels and personal property forming part of that partnership;
(b)the Husband shall indemnify the Wife with respect to all liabilities of the partnership (including but not limited to):
(i)creditors;
(ii)income tax liabilities;
(iii)goods and services tax; and
(iv)capital gains tax liabilities.
For the purposes of these orders, pursuant to section 90XT(1)(a) of the Family Law Act 1975 (Cth):
(a)the operative time is the date four days after service of these orders on the Trustee;
(b)the member spouse is the Husband Mr Overbaker born … 1976; and
(c)the non-member spouse is the Wife Ms Overbaker born … 1977.
The base amount allocated to the non-member spouse is $20,190.96 of the interest held by the member spouse in the J Superannuation Fund.
Whenever the Trustee makes a splittable payment for the interest held in the J Superannuation Fund by the member spouse, Mr Overbaker born … 1976, the Trustee shall pay to the non-member spouse his entitlement calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and there shall be a corresponding reduction in the entitlement that the member spouse would have had but for these orders.
The Husband be restrained by himself, his servants or agents from making any binding death benefit nomination to the Trustee of the J Superannuation Fund in favour of any child who is an eligible beneficiary within the meaning of Regulation 13 of the Family Law (Superannuation) Regulations 2001 which would have the effect of diminishing the value to the Wife of the splitting order made in order (16) herein.
Orders (15) to (17) (inclusive) of these orders are binding on the Trustee of the J Superannuation Fund.
Each party and the Trustee of the J Superannuation Fund have liberty to apply in relation to the implementation of orders affecting the superannuation interest.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders (the furniture, personal possessions and like chattels in the former matrimonial home being deemed to be in the possession of the Wife and the furniture, personal possessions and like chattels in Property A being deemed to be in the possession of the Husband);
(b)monies standing to the credit of the parties in any joint bank account are to become the property of the Wife;
(c)insurance policies remain the sole property of the owner/beneficiary named therein;
(d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed; and
(f)each party foregoes any claim they may have to any inheritances to which the other party is entitled to either presently or in the future.

IT IS NOTED that publication of this judgment under the pseudonym Overbaker & Overbaker is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BENDIGO

MLC 9564 of 2018

MS OVERBAKER

Applicant

And

MR OVERBAKER

Respondent

REASONS FOR JUDGMENT

Introduction

This matter relates to the parties’ competing applications for orders adjusting their property interests following the breakdown of their 21 year relationship.
The Wife is seeking orders that she receive 70% of the parties’ realisable assets and that there otherwise be a splitting order in her favour equalising the parties’ superannuation entitlements.
In order to achieve a 70/30 division of the parties’ realisable assets, the Wife proposes she retain the former matrimonial home at Property E (“the former matrimonial home”) and that the jointly owned property at Property A (“Property A”) be sold and that after sale costs, the discharge of the mortgage on that property and the payment of agreed liabilities, the net proceeds of sale be divided to achieve a 70/30% division of the parties’ assets.
The Wife argues such an adjustment in her favour is just and equitable as she has the primary care of the parties’ three children aged 14, 11 and 8, including their son [X] who has special needs, and because of the Husband’s greater earning capacity.
The Husband is seeking orders that will enable him to retain Property A. It is his evidence he is able to refinance the mortgage on Property A from its current level of $308,115 to $700,000. He proposes orders be made that he discharge the current mortgage on the former matrimonial home of $211,086 and transfer that property to the Wife and that he pay her a further $180,000.
The Husband does not reduce his proposal to a percentage division of the parties’ assets, but rather argues that his proposal is a fair outcome to both the parties and their children as it results in the Wife retaining an unencumbered home for herself and the children, gives her a reasonable capital amount and enables him to keep Property A which he can continue to farm and ultimately leave to the parties’ children.
The parties’ three children are [Y] born … 2005 and aged 14 (“[Y]”), [X] born … 2008 and aged 11 (“[X]”) and [Z] born … 2011, aged 8 (“[Z]”).

Background

The Wife was born on … 1977 and is aged 42 years. She is employed as a public servant working three days a week and earns $60,000 per annum. It is her evidence she is unable to work full-time as she is required to be available for the parties’ son [X], who has developmental and mental health issues. The Wife has not re-partnered.
The Husband was born on … 1976 and is aged 43 years. The Husband was employed as a tradesman but has been on sick leave for some two years because of an autoimmune disease. He receives income protection of $92,000 per annum.
Property A is a farm of approximately 168 acres upon which the Husband and his father run a business. The Husband receives an income from the business conducted on the farm. The Husband’s draft 2017/2018 tax return disclosed he received a net income from the business of $99,434.
It is the Husband’s evidence his father runs and manages the business and that he knows nothing of how it runs.
The parties began their relationship from when they were 15 years of age. They commenced cohabitation in 1996 and married 2002.
Neither party had assets of value when they commenced cohabitation.
During the relationship the Husband, to quote the Wife, “worked very hard”. The Wife also worked during the relationship and was the primary parent and homemaker.
The parties purchased their first home at Property K (“Property K”) utilising a gift of $13,000 from the Wife’s parents for the deposit. This property was sold in or about 2011 for $400,000.
It is the Wife’s evidence the parties also purchased a property at location L but she cannot recall the details of the purchase or sale. The Husband gave no evidence in relation to this property.
After the sale of Property K the parties purchased the former matrimonial home which is a home on a recent subdivision. Neither party deposes to what they paid for this property or how it was financed.
It is the Wife’s evidence supported by the evidence of her parents, that her parents loaned the parties $171,355.45 between February 2016 and May 2019 to effect renovations on the former matrimonial home.
It is the Wife’s evidence that whilst there is no written loan agreement between the parties and her parents, it was agreed they would pay interest on the monies advanced to them by her parents. There is no evidence before the Court of what the “interest rate” is.
It is the Husband’s evidence he knows nothing of the arrangements between the Wife and her parents to fund renovations on the former matrimonial home. It is his evidence that during the marriage the Wife managed the parties’ finances. She would provide him with the requisite bank card and he would use it.
Whilst the Husband acknowledges that monies were advanced by the Wife’s parents to assist with renovations of the former matrimonial home, it is his evidence that at best $50,000 of any monies advanced by the Wife’s parents was used for renovations. It is his evidence he does not know what the balance of any funds advanced to his parents were used for but disputes they were used for renovations. It is his evidence much of the renovation work was done by he, a family friend and the Wife’s father at no cost to the parties.
In 2012 the parties purchased Property A from the Husband’s parents for $500,000. The parties borrowed $350,000 from the National Australia Bank (“NAB”) and used $150,000 from the proceeds of sale of Property K to complete the purchase.
At the time of the purchase of Property A there was a sworn valuation prepared by M Property Valuers dated 25 October 2011 which valued the property at $675,000.
It is the Wife’s evidence the parties purchased Property A from the Husband’s parents because they were in financial difficulty and were being threatened with the loss of the property. It is her evidence the parties paid less than the sworn value of the property on the basis the Husband’s parents would continue to live on the property, operate their business and pay the parties a reduced market rental.
It is the Husband’s evidence that his parents sold the parties Property A at less than market value because the sale was to he and the Wife and to ensure the property remained in the family. The Husband argues this represents a contribution on his behalf as his parents could have sold the property for much more.
After the purchase of Property A the parties formed the business partnership “Company H”. In paragraph [24] of her trial affidavit sworn 16 August 2019 the Wife deposes:
“The primary source of income for the partnership is … paid to us by the husband who operates a business from the property.”

There is scant evidence before the Court as to the assets of and operation of Company H save for the Husband’s draft 2017/2018 tax return annexed to the Wife’s trial affidavit which show the Husband received $2,919.00 from the partnership.
It is the Wife’s evidence that the Husband and his father solely ran the business on Property A and she has no knowledge of how it has been conducted, especially since separation. It is the Wife’s further evidence that despite multiple orders of this Court for him to do so, including order (5) of the orders made 26 June 2019 which provides:
“5. By 4.00pm on 10 July 2019 the Husband is to produce to the Wife’s solicitors a letter setting out the following:
(a) by reference to the depreciation schedules annexed as pages 31 to 33 of the Wife’s trial affidavit filed on 5 February 2019:
(i) Details as to which of the listed assets have been retained; and
(ii) In the event that any of the assets have been disposed of, details as to when they were disposed of and any sale proceeds received;
(b) details of any other plant and equipment deposed of since separation which is not listed on the depreciation schedules referred to in sub-paragraph 5(a);
(c) a list of all plant and equipment owned by the parties and currently retained on Property A;
(d) a separate list of all plant and equipment owned by any third party and currently retained on Property A;
(e) details of any and all agents through which the Husband and/or his servants and agents have sold livestock since 30 June 2018.”,
the Husband has failed to provide any disclosure in relation to the business.
In response to questions put to him in cross-examination about the business, the Husband repeatedly stated he knows nothing of the business as it his father who runs the business.
In 2015 the Husband’s mother Ms A Overbaker lent the parties $70,000. A document headed “Agreement April 2015” and signed by Ms A Overbaker on 8 June 2015 and the parties on 9 June 2015 reads as follows:
“I Ms A Overbaker of … $70,000.00 to my son and his wife, Mr and Ms Overbaker, ….
Moneies (sic) paid into account:-
[Mr and Ms Overbaker] … NAB ac …
Reducing loan to $307,000-00
I agree to make weekly payments of $270- for rent/interest for use of the dwelling “Property A”
Loan to be reimbursed when property sold with compound interest of 4%”
The Husband alleges that in addition to the owing his mother $70,000 plus interest, the parties also owe his mother a further $20,000 for monies she lent them in or around 2010 to replace the roof on the former matrimonial home.
The Wife agrees the Husband’s mother made a contribution towards the cost of repairs to the roof on the former matrimonial home but does not believe the amount was $20,000 and understood her contribution to be a gift.
The Father’s evidence is the parties owe his father $34,000. It is his evidence his father paid $14,000 being half the cost of solar panels installed on the roof of the homestead at Property A on the basis these monies would be repaid. It is the Husband’s further evidence his father lent the parties $20,000 in March 2015.
In support of his claim the parties owe his father $34,000, the Husband annexes to his affidavit sworn 21 June 2019 an undated and unsigned credit schedule for a credit amount of $14,075 in which the customer name is Mr B Overbaker. The Husband also annexes a copy of the parties’ NAB joint account ending … which shows a cash and/or cheque deposit on 11 March 2015 of $20,000, which the Husband says is the $20,000 lent to the parties by his father.
The Wife does not agree the parties owe the Husband’s father any monies. It is her evidence the Husband’s father was living in the homestead when the solar panels were purchased. Whilst agreeing $20,000 was deposited into the parties’ account on 11 May 2015 the Wife’s evidence is she has no knowledge of the source of those funds and that if they were from the Husband’s father, there was never any discussion with her that this amount was a loan to the parties.
The parties separated in … 2017 when the Husband left the former matrimonial home and moved to Property A.
It is the Wife’s evidence she has had the primary care of [Y], [X] and [Z] since separation and that they have only spent occasional and inconsistent time with the Husband.
It is the Husband’s evidence [Y], [X] and [Z] regularly spend time with him on the farm and that he is a regular attendee at their sporting activities.
At the time of separation the primary production partnership owned stock, plants and equipment. It is the Husband’s evidence all stock has now been sold and he currently owns no stock. It is his evidence any stock currently on Property A is his father’s.
The Husband confirmed that he told his father to sell all of his stock because of the current legal proceedings.
Despite repeated requests by the Wife’s solicitors for full and frank disclosure in relation to the conduct of the business and the orders of the Court for that information, the Husband has failed to provide such disclosure.
In the Wife’s trial affidavit sworn 16 August 2019 she annexes a copy of correspondence from her solicitors to the Husband setting out the specific documents required by her pursuant to order (7) of the orders dated 26 June 2019. A copy of that letter is annexure “A” to this judgment.
In response to that correspondence, and it would appear in response to order (5) of the orders of 26 June 2019 the Husband forwarded to the Wife’s solicitors a handwritten response on 8 August 2019. A copy of the Husband’s handwritten document is annexure “B” to this judgment.
In the Wife’s trial affidavit sworn 16 August 2019 she annexes the draft financial statements for the Husband’s business for the year ended 30 June 2018 and his draft personal tax return for the financial year ended 30 June 2018.
Perusal of those documents disclose that:
·the net primary production income was $99,434.00;
·the closing stock had value of $33,705.06
·the distribution to the Husband from the parties’ partnership was $2,919.
The documents also include the 2017/2018 depreciation schedule for the business. It is annexure “C” to this judgment.

The issues

The issues in this matter are well defined and are as follows:
a)what constitutes the property pool for division between the parties and in particular:
i)do the parties owe the Wife’s parents $171,356.45;
ii)how much do the parties owe the Husband’s mother;
iii)do the parties owe the Husband’s father $34,000;
iv)should the value of the stock sold by the Husband after separation be added back to the pool;
v)what, if any, value should be attributed to the plant and equipment of the business;
vi)what is the value of the Husband’s boat and motorbike;
b)should there be an adjustment in the Husband’s favour for the parties purchasing Property A from his parents at less than its sworn value;
c)in the event any of the alleged loans from each parties’ parent/s are deemed to be gifts, should there be an adjustment in either parties’ respective favour to reflect that gift or gifts;
d)should there be an adjustment in the Wife’s favour for section 75(2) factors given she has the primary care of [Y], [X] and [Z] and, as she argues, the Husband’s greater earning capacity; and
e)should the Husband be afforded an opportunity to retain Property A.

The law

Section 79 of the Family Law Act 1975 (“the Act”) defines the Court’s powers in determining applications for property settlement. Section 79(2) of the Act provides that:
“The Court shall not make an Order under this Section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.”
Section 79(4) of the Act sets out the matters the Court must take into account when considering what orders should be made for the alteration of the interest of the parties in property. Those matters are:
“(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.”
The matters to be taken into account under section 75(2) of the Act are as follows:
“(a)   the age and state of health of each of the parties; and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)     himself or herself; and
(ii)     a child or another person that the party has a duty to maintain; and
(e)the responsibilities of either party to support any other person; and
(f)subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i)          any law of the Commonwealth, of a State or Territory or of another country; or
(ii)     any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l)the need to protect a party who wishes to continue that party's role as a parent; and
(m)if either party is cohabiting with another person--the financial circumstances relating to the cohabitation; and
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i)     the property of the parties; or
(ii)     vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)     a party to the marriage; or
(ii)     a person who is a party to a de facto relationship with a party to the marriage; or
(iii)   the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)    vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.”
The High Court in the matter of Stanford v Stanford [2012] HCA 52 held that prior to making orders for the division of the property in which the parties have an equitable interest in accordance with the provisions of section 79 of the Family Law Act 1975 (“the Act”), the Court must first determine that is just and equitable that the Court make such orders.
The High Court in Stanford (supra) held that in the majority of matters the decision as to whether it is just and equitable for the court to make property orders is easily resolved by the breakdown of the marital relationship and the mutual desire of both parties for orders altering their respective property interests.
This is such a matter, and thus it is apparent it is just and equitable that orders be made adjusting property matters between the parties.
Prior to the decision in Stanford (supra), a trial judge would follow the four step approach as articulated by the Full Court in Hickey and Hickey and Attorney General for the Commonwealth of Australia [2003] FamCA 395 when determining how to alter property interests between the parties.
The four step process set out in Hickey is as follows. Firstly, the Court determines the nature of the property pool and attribute valuations to that property. Secondly, the Court considers the contributions of the parties to the property pool including direct and indirect financial contributions and non-financial contributions often in the form of homemaker or parent. Thirdly, and after considering entitlements based on contributions the Court determines whether any further adjustments to either parties entitlement is proper, given the considerations under s.75(2) of the Act. Finally, the Court stands back and considers whether the proposed division of the property is just and equitable pursuant to section 79(2) of the Act.
The High Court in Stanford (supra) and subsequently the Full Court in Bevan and Bevan [2013] FamCAFC 116 observed that this four step approach should not be rigidly followed.
However, the Full Court in Bevan (supra) also indicated that in the majority of property cases, the four step approach is an appropriate manner in which to approach the determination of the division of properties between parties once the Court is satisfied that such division is just and equitable.
I am satisfied that this is a matter where the four step approach of Hickey is the appropriate approach to be taken to determine a just and equitable division of property between the parties.

The assets

Do the parties owe the Wife’s parents $171,356.45

It is the Wife’s evidence that her parents have been lending the parties money over a period of three-four years to enable them to undertake the renovations necessary on the former matrimonial home.
It is the Wife’s evidence that the former matrimonial home is a home that has required considerable renovation and repair.
It is the Wife’s evidence that the kitchen has been replaced, the lounge room walls have been replaced because of termite problems, floorboards have been replaced, decks have been built, bathrooms have been updated, flooding in the cellar has been rectified, the guttering has been replaced, the bedroom walls have been replaced and considerable painting has been done.
It is the Wife’s evidence that whilst much of the physical labour and repairs has been done by the Husband and by her father, the parties have also employed tradesman where their expertise and qualifications were needed.
The Wife concedes that she does not have receipts for all of the expenditure on the house as much of the work has been done for cash.
It is the Wife’s evidence that she has been paying interest to her mother for the monies advanced and that it was always the parties’ understanding that the monies advanced by her parents would be repaid.
The Wife’s mother Ms G swore an affidavit in these proceedings on 20 August 2019. Ms G also gave vive voce evidence at the final hearing.
Annexed to Ms G’ affidavit is a copy of correspondence forwarded to the Husband by the Wife’s solicitors which annexed a three page document which set out in detail the dates and the amounts loaned to the parties between 2016 and 2019, copies of the Wife’s NAB account showing deposits from the Wife’s parents into the Wife’s account, copies of the Wife’s account showing payment of interest to her mother, copies of the Wife’s father’s credit card statement detailing transfers into the Husband’s account and two receipts for direct payments made by the Wife’s father for work that was done on the former matrimonial home.
Ms G confirmed in her vive voce evidence that she and her husband had lent the parties $171,356.45 to assist them in their renovations on the former matrimonial home. It is her evidence these monies were advanced on the basis that they would be repaid and that in the interim there would be interest payable on the monies advanced. It is Ms G’ evidence the wife has been regularly paying interest to her on the loan amount.
The Husband concedes that there were some monies provided by the Wife’s parents to assist in the renovations but he disputes the amount being claimed. In his estimation the renovations to the former matrimonial home have cost no more than $50,000-$60,000 given the amount of work that was done by he and the Wife’s father for no charge.
The Husband submits that if additional funds have been advanced by the Wife’s parents to the Wife, then that is a private agreement between the Wife and her parents and he does not accept that those funds have been utilised in the renovation of the former matrimonial home. He therefore argues the whole of the monies advanced by the Wife’s parents are not a joint liability.
The Husband concedes that it was the Wife who managed their finances, including attending to the payment of bills. This would include the cost of the renovation of the former matrimonial home. In that circumstance the Husband is only estimating the costs of the renovations to the property.
Further, the Wife’s mother Ms G was a very credible witness. I have no reason to doubt the veracity of her evidence in relation to the assistance that she and her husband have provided to these parties.
I am therefore satisfied that the parties owe the Wife’s parents $171,356.45.

How much do the parties owe the Husband’s mother Ms A Overbaker

It is the Husband’s evidence that the parties owe his mother $70,000 plus compound interest of 4% per annum in relation to the loan made by her to the parties in June 2015. This loan is evidenced by the agreement signed by the parties and the Husband’s mother.
The Wife concedes that she and the Husband owe the Husband’s mother $70,000. She does not however seems to concede that under the terms of the agreement signed by the parties, the Husband’s mother is also owed compound interest of 4% per annum on this amount.

Given the parties have not paid this loan, the parties are obliged to pay compound interest on the amount outstanding.
I am therefore satisfied that the parties owe the Husband’s mother $82,600, being $70,000 principal plus compound interest at 4% from June 2015 until August 2019, a period of four years and two months, is $12,600.
The next question is whether the parties owe the Husband’s mother a further $20,000, which the Husband claims was lent by his mother to the parties to effect repairs to the roof on the former matrimonial home.
The Wife agrees that the Husband’s mother provided funds to enable them to replace or repair the roof on the homestead, at or around the time of purchase. She however refutes that it was an amount of $20,000. It is her further evidence she understood that whatever the amount was the Husband’s mother advanced for the roof repairs, it was a gift and was not a loan.
Unlike the loan made by the Husband’s mother in 2015 of $70,000, there is no loan agreement between the parties in relation to whatever the amount was that was provided by the Husband’s mother to assist the parties in repairing the roof on the homestead.
There also does not appear to have ever been a demand for payment of this sum until after the parties separated.
In those circumstances I am not satisfied that the monies advanced by the Husband’s mother to repair the roof was a loan by the Husband’s mother that is repayable by the parties. I note however that clearly this was a contribution made by the Husband’s mother to assist the parties.

Do the parties owe the Husband’s father Mr B Overbaker $34,000

It is the Husband’s evidence that the parties owe his father $34,000 being $14,000 that his father contributed towards the cost of solar panels that were installed on the homestead on Property A and a further $20,000 cash that he says the father lent to the parties in March 2015.
The evidence provided by the Husband in support of that submission is set out in paragraph [34] of this judgment.
The Husband filed an affidavit from his father Mr B Overbaker sworn 12 August 2019. Amidst a myriad of complaints about the Wife, her solicitor and allegations of misappropriation and bullying, the Husband’s father contends that he lent the parties $20,000 cash in 2015 and paid $14,000 towards the cost of the solar panels at Property A. Amongst a large number of documents annexed to the Husband’s father’s affidavit, the relevance of which was difficult to discern, were the same documents annexed to the Husband’s affidavit that are detailed in paragraph [34] herein.
As has also been previously noted in this judgment, the Wife challenges that these amounts were loans by the Husband’s father to the parties. She highlights that the Husband’s father was living in the homestead at the time the solar panels were installed so their addition to the property was to his advantage. She further notes that whilst $20,000 went into the Husband’s account, there is no evidence as to its source.
The difficulty with the Husband’s claims in this regard is that there was and is considerable monies moving in and out of the Husband’s father’s account and the Husband’s account as part of the everyday running of the business. It is difficult to know whether the payment of $20,000 in March 2015 into the Husband’s account, accepting it was made by the Husband's father, was a loan, moneys to which the Husband was entitled or whether these moneys went into the Husband’s account and were subsequently taken out by either the Husband or his father in relation to ongoing business expenses.
Whilst the Wife’s Counsel chose not to cross-examine the Husband’s father, and therefore his evidence that the monies advanced by him were a loan to the parties was not challenged, the complete lack of full and frank disclosure by the Husband as to the operation of the business conducted by the Husband’s father and himself, the Husband’s father’s evidence that he conducts a cash meat business on the Husband’s behalf as part of the business and the Husband’s evidence he has no personal knowledge of the practical and financial running of the business as his father does it all, makes it impossible to determine if these monies were a loan, whether it was monies to which the parties were entitled or if these funds were subsequently used in the running of the business.
Accordingly, the Court cannot be satisfied these monies were a loan to the parties.

Should the value of the stock sold by the Husband after separation be added back to the pool

Despite repeated requests for full and frank disclosure from the Husband as to his dealings with the parties’ stock post-separation, no such disclosure has been provided.
All that is known is that on the Husband’s instructions, the Husband’s father has sold all of the stock owned by the parties at separation. What that stock was sold for is unknown. What was done with the proceeds of sale is also unknown.
The best evidence available to the Court in relation to the stock of the parties is that contained in the draft financial statements for the Husband’s business for the financial year ended 30 June 2018 and his draft 2017/2018 tax return. In these documents the parties’ stock is valued at $33,705.06 as at 30 June 2018.
In circumstances where there has been a failure to make full and frank disclosure and where the only evidence before the Court is that the stock has been sold and that the Husband retained the benefit of the proceeds of sale, the figure in the tax returns will be accepted as the value of the parties’ stock. This amount will be nominally added back to the pool of assets for division between the parties.

What, if any, value should be attributed to the plant and equipment on Property A

It is submitted on behalf of the Wife that the only evidence before the Court in relation to the value of plant and equipment on Property A is that which is contained in the depreciation schedule annexed to the draft tax returns for the Husband’s business for the financial year ending 30 June 2018.
The value of the plants and equipment contained in that document is $125,435.
It is submitted on behalf of the Wife that as that is the best evidence available to the Court in relation to the plant and equipment and its value, that is the figure that should be included in the pool of assets for division between the parties.
The Husband has responded to the request for details in relation to the plant and equipment in a handwritten response sent to the Wife’s solicitors which is annexure “B” to this judgment.
In the Husband’s handwritten document he identifies that much of that which is listed in the depreciation schedule is either no longer working, that some of the items have been sold for relatively small amounts of money and that other items that are listed are included in the valuation of Property A.
The Husband also invited the Wife to attend upon the property and obtain her own valuation of the plant and equipment if she did not accept his estimate that the plant and equipment had very little value. She chose not to do so.
A depreciation schedule is not a document that values the items listed therein. It is a document prepared for tax purposes only.
When she did not accept the Husband’s estimate of the value of the plant and equipment, the Wife had an opportunity to obtain her own valuation. She chose not to do so.
I am not satisfied that the depreciation schedule is an appropriate document upon which to value the plant and equipment, absent valuations other than the Husband’s handwritten estimate of the value of the plant and equipment, the Court is left with no other choice but to adopt the Husband’s estimated value of the plant and equipment.

What is the value of the Husband’s boat and motorbike

In the Wife’s trial affidavit and outline of case the Wife estimates the value of the Husband’s boat at $10,000 and his motor bike at $3,000. The Husband estimates the value of his boat at $5,000 and his motorbike at $2,000. Neither party places sworn or any other independent valuation such as red book or the like, of these items into evidence.
In the circumstances I have averaged the parties’ estimates of the value of these items for the purposes of determining the property pool such that the boat is valued at $7,500 and the motorbike at $2,500.

The Pool

The parties were initially in dispute in relation to some of the listed liabilities for the Husband’s business contained in the draft financial statements. However the Husband conceded at the final hearing that some of the listed liabilities of the business are so old that they are statute barred, others are liabilities allegedly owing to entities that are no longer in existence and some are remaining accounts with suppliers that have been incurred by either the Husband or the Husband’s father post-separation. The Husband therefore conceded that those liabilities should not be included in the list of assets of liabilities for the purpose of these proceedings.
The parties were otherwise in agreement as to two specific current liabilities that are owed as a result of the activities on Property A.
The parties also agreed not to include their respective motor vehicles in the pool of assets for division as they have either been disposed of or are of very similar value.
The pool of assets for the parties, reflecting either agreed values or the determination made by this Court in relation to those issues that were in dispute, is as follows:

Pool
Property A less mortgage to NAB	$1,200,000.00 -$308,715.00 $891,285.00
Property E less mortgage to NAB	$455,000.00 $211,086.00 $243,914.00
The Husband’s boat	$7,500.00
The Husband’s motorbike	$2,500.00
Plant and equipment	$13,921.00
Addbacks
Stock as at 30 June 2018, sold by the Husband	$33,704.00
$1,192,824.00
Liabilities
Debt to the Wife’s parents	$171,356.45
Debt to the Husband’s mother	$82,600.00
Debt to Mr B	$22,500.00
Debt to Mr C	$17,000.00
$293,456.45
TOTAL NON-SUPERANNUATION ASSETS	$899,367.55
Superannuation
The Wife’s superannuation	$81,662.31
The Husband’s superannuation	$122,044.23
TOTAL SUPERANNUATION	$203,706.54

Contributions

The parties purchased Property A from the Husband’s parents for $175,000 less than its sworn value.
It is the Wife’s evidence that the purchase price was negotiated between she, the Husband and the Husband’s parents and was mutually agreed in circumstances where the parties purchased the property to assist the Husband’s parents as they were in financial difficulty at the time and on the basis that the Husband’s parents would continue to live on the property and pay reduced rent to do so. It is the Wife’s submission that any alleged contribution on behalf of the Husband by his parents selling the property to the parties at less than its market value is offset by these considerations.
It is the Husband’s evidence that his parents sold the property to the parties at a reduced sale price to assist the parties in being able to purchase the property and to ensure it stayed in the family.
The Husband therefore contends that his parents’ generosity should be credited to him as a contribution to the parties’ asset pool, particularly in circumstances where the value of that property has more than doubled since its purchase and the parties are the beneficiaries of that increase in value.
The Husband further submits that in the event the Court does not find that moneys either in whole or in part made available to the parties by his parents were loans, then those gifts and the assistance provided by his parents should also be considered as contributions made on his behalf by his family.
Whatever may have been the circumstances surrounding the parties’ purchase of Property A, they were able to purchase it at a price considerably lower than its market value as a result of the Husband’s parents agreeing to sell it to them at that lower price.
This has enabled the parties to significantly increase the property available for distribution between them at this time.
Further, whatever was the basis of the payments made by the Husband’s parents, they too have advantaged the parties in this matter.
In those circumstances, I am satisfied that there should be an adjustment in the Husband’s favour for contributions made by his parents and that adjustment should be 5%.

Section 75(2) factors

The Wife is seeking an adjustment for section 75(2) factors in her favour of 20% on the basis she will have the ongoing primary care of the parties’ three children including [X] who has special needs, and because of what she claims is the disparity between she and the Husband’s earning capacity.
It is the Wife’s evidence that she can only work three days per week because of her obligations to care for [X] and that this limits her to earning approximately $60,000 per annum.
In comparison, the Wife submits that the Husband has a known earning capacity of in excess of $90,000 as a tradesman and that whilst he is currently unable to work, he is still receiving that income by way of income protection insurance.
The Wife also notes that the Husband’s business has generated an income to him in excess of $90,000 over the last three years. She submits there is nothing to prevent the Husband continuing to generate that income, even if Property A is sold, as he and his father will be able to agist other land on which to conduct their business.
The Husband argues that he sees a great deal more of the children than is conceded by the Wife and that whilst they live with the Wife they spend significant and substantial time with him. It is his further evidence he pays regular child support as assessed by the Child Support Agency.
The Husband further argues the health issues which have caused him to be in receipt of income protection insurance payments means his income earning capacity is now severely compromised. The Husband places no evidence before the Court in relation to his health issues or whether they will impact on his capacity to work in the future.
I am in agreement that there should be an adjustment in the Wife’s favour for section 75(2) factors. I am satisfied that she has the primary care of the parties’ three children, including the additional responsibilities to care for [X].
I am of the view that the Wife’s earning capacity is less than that of the Husband who on the available evidence has the capacity to generate a greater income than does the Wife.
Accordingly I am satisfied there should be an adjustment in the Wife’s favour for section 75(2) factors of 15%.

Just and equitable

This matter has been unable to resolve because the Husband is desperate to be able to retain Property A and struggles to comprehend or accept an outcome that will not enable him to do so.
As can be seen from the determinations in this matter, the parties’ realisable asset pool is to be divided such that the Wife receives 60% of same and the Husband receives 40% of same.
On the basis of the pool of assets set out in paragraph [107] herein, the offer that the Husband has made would see the Wife receive 51.5% of the parties’ realisable assets. This is clearly less than the just and equitable division as determined by this Court.
The Husband’s proposal is that he discharge the mortgage on the former matrimonial home and pay the Wife an additional $180,000 and that she be responsible for the debt to her parents. This in real terms would reflect a payment to the Wife of $391,086. The amount that the Husband would have to pay to the Wife in order to retain Property A is $467,062.98. Therefore the Husband’s proposal is $75,976.98 shy of achieving an outcome that would enable him to retain Property A.
Given the Husband’s desperate wish to retain Property A, I am of the view orders should be made that affords him the opportunity to ascertain whether it is possible for him to borrow the amount which would enable him to do so. If the Husband is unable to borrow an amount that would enable him to pay the Wife $467,062.98, the orders will provide that Property A be sold and the net proceeds of sale after the payment of the agreed liabilities will be divided such that the Wife will retain the former matrimonial home encumbered by its current mortgage and the debt to her parents and receive from the proceeds of sale an amount such that she has 60% of the net realisable assets.
Somewhat unusually, orders will not be made that from the proceeds of sale the Wife receive the amount that the Husband would have paid her to retain Property A plus penalty interest. This is because the Wife’s evidence is that the real estate agents she has consulted have advised her that if properly marketed, Property A may achieve a sale price considerably higher an amount greater than the current sworn valuation. It seems only fair that both parties should benefit if this were to prove to be correct.
The orders that are proposed enable the Husband an opportunity to retain Property A if that is possible. If not, he will receive sufficient moneys to re-establish himself. The Wife will retain the former matrimonial home and have sufficient funds to discharge the mortgage on the former matrimonial home, if she so chooses, repay the loan to her parents and have some additional moneys upon which she and the children’s future financial security can be based.
For all these reasons I am satisfied that this outcome is just and equitable.

Superannuation

The Wife proposes orders should be made equalising the parties’ current superannuation entitlements. The Husband made no submissions in relation to that issue.
Given the lengthy marriage of these parties and their hard work during the marriage, I am satisfied that it is only reasonable that such an order be made.
Accordingly, a superannuation splitting order will be made that from the Husband’s superannuation, a base amount of $20,190.96 be allocated to the Wife.

I certify that the preceding one hundred and thirty six (136) paragraphs are a true copy of the reasons for judgment of Judge Bender

Associate:

Date: 10 October 2019

[2019] FCCA 2863

10 October 2019

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